Excerpt: - .....period during which they had remained in possession. both the auction purchasers and the judgment-debtor claimed interest on the amount due to each set. the high court had not given any direction on the question of the payment of interest, either in favour of the auction purchasers so far as the purchase money was concerned, and also so far as the judgment-debtor was concerned as regards the amount of mesne profits which might be found to be due. the judicial committee declined to allow interest to either party, as in the view of their lordships the equities of the case would be met by not allowing interest in either case. 25. this is a direct authority on the question that the auction purchasers are entitled to get back a refund of the amount which had been paid by them for the.....

Judgment:

R.P. Mookerjee, J.

1. Although the point raised in this appeal is a very short one relating to the liability of the defendant to pay interest on the amount decreed for the period anterior to the filing of the suit, it will be necessary to refer in brief to the facts of the case to appreciate the nature of the claim made as also the exact legal position.

2. The facts giving rise to the suit out of which the present appeal arises are all admitted ones. Touzi No. 2632 within the Collectorate of 24-Parganas was put up to sale as the said estate was in arrears in respect of education cesses amounting to Rs. 500/- and odd. On 17-4-1944, the said Touzi was put up to sale for the certificate debt and was purchased by the plaintiff Surja Kanta Jana for Rs. 11200/-. The said amount was deposited in two instalments, the first portion being paid on the date of the sale along with the poundage fee, and the balance on 27-4-1944. Before the sale could be confirmed one of the certificate debtors moved an application under Section 23(1), Public Demands Recovery Act for setting aside the order for sale, but the certificate officer rejected the same and the sale was confirmed on 24-7-1944.

3. In the meantime, however, the certificate debtor had preferred an appeal against the order of rejection of the petition filed by the judgment-debtor for setting aside the same and the additional Collector subsequently set aside the order of the certificate officer, and remitted the case for rehearing by the certificate officer. On this occasion the certificate officer held that the certificate in execution of which the sale had taken place was a void one for reasons which we need not enter upon at this stage. This order was passed on 31-10-1944

4. The sale having been set aside the present plaintiff auction purchaser applied for the withdrawal of the amount which had been deposited by him as auction purchaser and a payment order was passed therefor. But on 30-12-1944, it was reported to the Collector that payment could not be made as out of the deposit previously made by the auction purchaser the Government had treated the same as available for the payment of other certificate debts payable to the Collector in respect of the same estate. It is not necessary to refer to the subsequent attempts which had been made by the Collector for recovery of the amount from the certificate debtor, as the decision in the present case as to whether the auction purchaser is entitled to get back the amount which had been deposited by him does not depend upon the success or otherwise of the certificate holder, viz., the Collector to recover the amount which had been given credit to the certificate debtor in other certificate cases.

5. As the auction purchaser failed to get a refund of the amount he served a notice under Section 80, Civil P. C. on the Collector which was served on 20-5-1945. No steps appear to have been taken by the Collector to refund the amount to the auction purchaser until after the present suit was filed on 6-1-1947.

6. The plaintiff claimed that he was entitled to get back the consideration money which had been paid by him in the certificate case above-mentioned together with interest from the date the sale was set aside to the date of payment as also the poundage fee paid by him.

7. On behalf of the Province various defences were raised including the maintainability of the suit as also on the merits of the claim. It is not necessary to refer in greater detail the defences as all the other defences except one have not been pressed before us. The only point pressed in this appeal is about the liability of the Province to pay interest on the amount ordered to be refunded by the Lower Court.

8. The learned Subordinate Judga overruled all the objections raised on behalf of the Government, and held that the plaintiff was entitled to maintain the suit, and the defendant Government was bound to repay the amount with interest from the date when the payment was refused, i.e., 30-12-1944, till the date of the suit. The learned Subordinate Judge further allowed costs, calculated on the 'ex parte' scale,

9. As stated already, the only point taken on behalf of the Province is that the interest allowed for the period anterior to the filing of the plaint ought not to have been allowed.

10. On behalf of the appellant reliance was placed on certain observations of the Judicial Committee in --'B. N. Rly. Co. Ltd. v. Ruttanji Ramji' in support of the contention that no interest was payable for the period before the filing of the plaint.

11. To appreciate the significance of the observations made by the Judicial Committee, it is necessary to refer to the facts of the particular case in which those observations were made. That was a case in which the plaintiffs respondents had claimed against the Railway Company sums due under three contracts in connection with the construction of certain Railway work. After the amount payable was determined by Court, the claim to interest on the amount so decreed came up for consideration. The effect of the decision in that case is that such interest cannot be paid unless there is an express stipulation to pay interest; further a promise to pay interest cannot be implied; the case does not come within the provisions of the Interest Act (32 of 1839). It was, however, further observed by the Judicial Committee that interest could be paid in excess where the subject matter could be brought within the jurisdiction of Courts of Equity on the principles and conditions in which the Courts of Equity in England assumed jurisdiction. Reference was made in this connection to the observations of Lord Tomlin in -- 'Maine and New Brunswick Electrical Power Co. v. Hart' AIR 1929 PC 185 at p. 188 (B):

'In order to invoke a rule of equity it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as. for example, the non-performance of a contract of which equity can give specific performance.'

In that particular case the Judicial Committee came to the conclusion that the facts did not attract the equitable jurisdiction of the Court and could not come within the purview of the proviso to Section 1 of the Interest Act of 1839.

12. The decision in the above case disallowing interest is not at all apposite in the present case principally because the claim as laid by the plaintiff here is not by any stretch of imagination based on any contract. The purchase money paid by the plaintiff and previously deposited in Court is after that sale is set aside by the Court is recoverable by him on the well settled principles of restitution.

'One of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors and when the expression 'the Act of the Court' is used, it does not mean merely the act of the primary Court or of any intermediate Court of appeal, but the act of the Court as a whole from the last court which enjoys jurisdiction over the matter up to the highest Court which finally disposes of the case.'

14. The principles of restitution are recognised in Section 144, Civil P. C. but it is also well settled that the duty of the Court and its jurisdiction to grant restitution is not limited by the words of Section 144 of the Code. The Judicial Committee while dealing with the Court's duty to order restitution in a case where a sale in execution of a decree was set aside observed in the following terms in --'Jai Berham v. Kedarnath' AIR 1922 PC 269 (D): 'On the main question--namely, whether the auction purchasers are entitled to repayment of the deposit put into Court as a condition precedent to their handing over possession to the judgment-debtors, their Lordships are in agreement with the judgment of the High Court and think the order already referred to should on this point be affirmed. It is the duty of the Court under Section 144, Civil P. C. to 'place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed'. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved.'

15. What the plaintiff has done in the present case by filing the suit is to invoke the inherent jurisdiction of the Court for getting a refund of the money which the certificate holder had no right to hold after the certificate sale is set aside. Section 144, Civil P. C. is not applicable in terms of the present case, and this does not require any elaboration. It may be sufficient to point out that the proceedings in course of which the sale had taken place, and the order which had been passed subsequently setting aside the sale were under the Public Demands Recovery Act. The Courts have repeatedly attempted to explain the terms and to extend the scope, of Section 144, Civil P. C. so as to include within its purview cases, where rights of parties have to be adjusted, not because a previous decree has been set aside by an appellate Court, but by a Court of co-ordinate jurisdiction, and even by a separate Court as in -- 'Maqbool Alam Khan v. Khodaija Begum' AIR 1949 Pat 133 (FB) (E). Similar extension of the scope of Section 144, Civil P. C. has been made by the Courts in various cases. In our view, however, it is not possible to attract Section 144 to the facts of the present case and to hold that a separate suit by the auction purchaser to get a refund of the amount deposited by him cannot lie; and this has not been questioned on behalf of the State. It is the inherent and equitable jurisdiction of the Court which is invoked by the plaintiff. This has to be properly appreciated and kept in view before we proceed to decide the question as to whether interest can be claimed by the decree-holder on the amount decreed.

16. If restitution is directed to be made under Section 144, Civil P. C., the Court is bound to put back the persons concerned to the position which they would have occupied had the order now set aside or modified had not at all been passed. All the losses which had been incurred by a party who had attempted to act according to the directions of the Court are to be compensated. Therefore, interest on amounts invested may be paid in fit cases.

17. Reference may in this connection be made to -- 'Shanmugasundara Mudaliar v. Ratnavelu Mudaliar' AIR 1933 Mad 33 (2) (F), where the Madras High Court went so far as to allow interest on deposit made by a judgment-debtor, even though the amount so deposited had not been withdrawn by the decree-holder. The judgment-debtor in this case was called upon to deposit hall' the costs decreed by the lower Court as a condition precedent for getting stay of sale in execution which was due to be held. The judgment-debtor was ultimately successful in the appeal, and it was held that the judgment-debtor was entitled to get back the deposit with interest in spite of the fact that the decree-holder had not withdrawn the amount so deposited after furnishing security as the Court had directed.

18. The principle underlying such cases is that it is the Court which seeks to remedy through proceedings in restitution, the injury which has been caused to a party who has been ultimately successful on the final result of the litigation. In all such cases all the injury that might have been done to a person is to be made good. It was further observed in that case.

'The fact that the other party has gained no advantage does not affect the question.'

19. It is not necessary for our present purpose to go to such ah extreme length, as in the case now before us, the Government had not only in its custody the amount deposited as purchase money, but had utilised such sum for the reduction of the debt which the judgment-debtor owed to the Government in other accounts.

20. Reference may also be made in this connection to the observations by a Division Bench of this Court in -- 'Ashutosh Goswami v. Upendra Prosad Mitra' AIR 1917 Cal 188 (2) (G). It was pointed out that in cases not comprehended strictly within the letter of Section 144, Civil P. C. which makes grant of restitution obligatory in certain circumstance, restitution is noc a matter of right, but depends upon the sound discretion of the Court, and will be ordered only when the justice of the case calls for it; the test, however, of what is just must be determined with reference to the imperative requirements of the law applicable to the subject matter. The Court cannot withhold relief by way of restitution when a sum has been paid out on the strength of an erroneous decision, even on a question of law or even of limitation. In that case also the question arose whether when restitution is to be made of the sum withdrawn, should it be with interest thereon, Relying on -- '(1871) LR 3 PC 465 (C)';

-- 'Forester v. Secretary of State', 4 Ind App 137 (PC) (J), it was held that interest must be paid by the decree-holders from the date of withdrawal to the date of repayment into Court.

21. We may in this connection consider another decision to which reference was made by the learned Advocate for the appellant, viz., -- 'Jagat Kishore v. Parmeshwar Singh', : AIR1951Pat348 (K). In the first place the facts in that case are altogether different from the facts of the case now before us. The decree-holder had been paid twice over, and a suit was brought for the recovery of the excess amount such claim being based upon a breach of an implied contract as the decree-holder had agreed to get the payment certified and not to execute the decree any further. One of the payments which had been so made for which the excess payment was due was a payment out of Court, and the claim itself was based upon a contract or promise of an implied contract. Considerations attendant on such facts are altogether different as reference has to be made, so far as the claim for interest is concerned, to Section 73, Contract Act along with the provisions of the Interest Act. The observations of one of the learned Judges, therefore, to which our attention was drawn by the learned Advocate for the appellant, have to be taken with reference to the facts of that case. It may be noticed in passing, however, that interest was allowed in that particular case but I am not referring to that fact in support of the reasons given by the learned Judge for reasons already referred to.

22. Reference, however, will have to be made to the observations of the Judicial Committee in three other cases where on the facts of those particular cases interest had not been allowed. '4 Ind App 137 (PC) (J)', is an authority for the proposition that when an order of the Judicial Committee is silent as to the payment of interest upon the costs decreed the executing Court has no power to direct payment of these costs with interest. The proposition so laid down does not help us in determining the question now before this Court. The disallowance of interest in that case, therefore, cannot be used as an authority for the case before us.

23. In -- 'Thakur Ganesh Bakhsli v. Thakur Harihar Bakhsh' 31 Ind App 116 (PC) (L), the liability to pay rent was held to be derived from the status of under proprietor established by the decree in question and not from contract. The claim was based on certain statutory provisions, viz., the Oudh Rent Act of 1886. The Judicial Committee pointed out that under the decree in question no interest had been allowed. It was not a suit for breach of contract within the meaning of Section 73, Indian Contract Act. Although the Interest Act was passed with a view to extend to India the provisions of the English Act (3 and 4 Will. 4, c. 42) and the words used in both the statutes were almost identical, the decree in question being silent as to interest, the Court was right in disallowing interest.

24. 'AIR 1922 PC 269 (D)' is a case in which a sale in execution of a decree had taken place in 1904, and the certificate of sale was set aside by the Judicial Committee in 1913. The auction purchasers had in the meantime come into possession, and the amount which had been paid by the auction purchasers had been distributed to certain other creditors of the judgment-debtor. The auction purchasers had also paid off certain bonds secured on the property and which were mentioned as encumbrances in the certificate of sale. When the judgment-debtor applied to be put back in possession from the auction purchasers it was resisted by the latter, and it was urged that the judgment-debtor could not recover possession until and unless the auction purchasers were paid back with interest the amount which had been paid off by them when they had purchased the property at the Court sale. They further claimed that the bonds which had been paid off by them had been so done for the benefit of the judgment debtor, and the latter ought to reimburse the auction purchasers in respect of such payments as well. The trial Court had dismissed the claim but the High Court reversed the same and allowed the claim of the auction purchasers subject to certain conditions.

On the matter being taken up before the Judicial Committee the right of the auction purchasers to be reimbursed, so far as the purchase money was concerned, was affirmed. It was further directed that the judgment-debtor would be entitled to the mesne profits from the auction purchasers for the period during which they had remained in possession. Both the auction purchasers and the judgment-debtor claimed interest on the amount due to each set. The High Court had not given any direction on the question of the payment of interest, either in favour of the auction purchasers so far as the purchase money was concerned, and also so far as the judgment-debtor was concerned as regards the amount of mesne profits which might be found to be due. The Judicial Committee declined to allow interest to either party, as in the view of their Lordships the equities of the case would be met by not allowing interest in either case.

25. This is a direct authority on the question that the auction purchasers are entitled to get back a refund of the amount which had been paid by them for the purchase of the property, and is based upon the principle of restitution. Reliance was placed upon the observations of Cairns L. C. in -- '(1871) LR 3 PC 465 at p. 475 (C)'. Payment of interest on the amount found due would depend upon 'the equities of the case'. In the case, before the Judicial Committee, the claim of the auction purchasers to interest on the amount to be refunded was set off as against the claim of the judgment-debtor to interest on the mesne profits during the period the auction purchasers had been in possession. It was in view of the special circumstances, I take it, that the Judicial Committee thought that it was not equitable to grant interest to either of the parties.

26. In the case now before us, however, this is a clear case where the auction purchaser who was a third party had deposited the amount and had not obtained possession, and ultimately the sale was set aside. In the mean time the Government with whom the amount of the purchase money was in deposit utilised the same for its own purpose, and in such circumstances, the auction purchaser is equitably entitled to be fully reimbursed, and it is the duty of the Court to see that by the setting aside of the order for sale, a third party auction purchaser is not injured in any way. His money which had been with the government so long and has been utilised by the Government should come back to the auction purchaser together with interest which the auction purchaser could have easily obtained had he invested the money in the best of securities. The order passed by the learned Subordinate Judge allowing interest for the period anterior to the filing of the suit must, therefore, be upheld.

27. A cross objection has been filed on behalf of the plaintiff. The first point raised in the cross objection relates to the rate of interest which has been allowed by the learned Subordinate Judge. In the circumstances of the present case, we think that the rate of interest at four per cent, was a fair rate which the plaintiff was entitled to.

28. The next point raised is about the scale of costs allowed by the learned Subordinate Judge. As has been pointed out already, not only did the Province raise objections about the maintainability of the suit, but also attacked the claim of the plaintiff on the merits as well. During the hearing also the same attitude was maintained. It is, therefore, not understood how the learned Subordinate Judge treated the case as being in the nature of an 'ex parte' hearing. Evidence was not led by the Government, but if legal objections, as taken in the written statement, are pressed before the Judge, there is no reason why the ordinary rule that costs follow the result should not be attracted in the present case also. The costs in the lower Court will, therefore, be calculated in the ordinary manner and not on an 'ex parte' basis, and the plaintiff will be entitled to full costs on proportionate basis as he laid his claim at a figure slightly higher than what has been allowed by the lower Court.

29. This appeal is accordingly dismissed with costs, and the cross objection is allowed in part. The plaintiff will be entitled to the costs of this Court. The hearing fee in the appeal and in the cross objection is assessed at the consolidated amount of five gold mohurs. The defendant is directed to pay the amount within one month from the date of the arrival of the records in the lower Court less such amount as might have been already paid.